Prabhu Steel Industries Ltd. कंपली की लेखा नीति

Mar 31, 2024

1.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Property, Plants and Equipments
Measurement at Recognition

An item of property, plants and equipments that qualifies as an assets is measured on the initial recognition at
cost. Following the initial recognition, item of property, plants and equipments are carried at its cost less
accumulated depreciation and accumulated impairment losses, if any.

The Company identifies and determines cost of each part of an item of property, plants and equipments
separately, if the part has a cost which is significant to the total cost of that item of property, plants and
equipments and has useful life that is materially different from that of the remaining items.

The cost of an item of property, plant and equipment comprises of its purchase price net of discounts, if any,
including import duties and other non-refundable purchase taxes or levies, directly attributable cost of bringing
the assets to its present location and working condition for its intended use and the initial estimate of
decommissioning, restoration and similar liabilities, if any.

Cost includes the cost of replacing a part of the plants and equipments, if the recognition criteria are met.
Expenses directly attributable to new manufacturing facilities during its construction period are capitalized, if the
recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and
machineries are capitalized under the relevant heads of property, plants and equipments, if the recognition
criteria are met.

When the significant parts of property, plants and equipments are required to be replaced at periodical intervals,
the Company recognizes such part as individual assets with specific useful lives and depreciates them
accordingly.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flows to the Company and
the cost of the item can be measured reliably. The carrying amount of any components accounted for as a
separate asset is de-recognized when replaced.

All the costs, including administrative, financing and general overhead expenses, as are specifically attributable
to construction of a specific projects or to the acquisition of a property, plants and equipments or bringing it to
its present location and working condition, is include as a part of the cost of construction of the project or as a
part of the cost of property, plants and equipments, till the commencement of its commercial production. Any
adjustments arising from exchange rate variations attributable to the property, plants and equipments are
capitalized as aforementioned.

Borrowing costs relating to the acquisition/construction of property, plants and equipments which takes the
substantial period of time to get ready for its intended use are also included in the cost of property, plants and
equipments/cost of constructions to the extent they relate to the period till such property, plants and equipments
are ready to be put to use.

Any subsequent expenditure related to an item of property, plants and equipments is added to its book value only
and only if it increases the future economic benefits from the existing assets beyond its previously assessed
standard of performance.

Any items such as spare parts, stand by equipment and servicing equipments that meet the definitions criteria of
the property, plants and equipments are capitalized at cost and depreciated over the useful life of the respective
property, plants and equipments. Cost is in the nature of repairs and maintenances are recognized in the
statement of profit and loss as and when incurred.

Capital Work-in-Progress and Capital Advances

Cost of property, plant and equipment not ready for intended use, as at the balance sheet date, is shown as a
“Capital Work-in-Progress”. The capital work-in-progress is stated at cost. Any expenditure in relation to survey
and investigation of the properties is carried out as capital work-in-progress. Such expenditure is either
capitalized as cost of the projects on completion of construction project or the same is expensed in the period in
which it is decided to abandon such projects. Any advances given towards acquisition of property, plant and
equipment outstanding at each balance sheet date are disclosed as “Other Non - Current Assets”.

The Company has elected to consider the carrying value of all its property, plants and equipment appearing in its
financial statements and used the same as deemed cost in the opening Ind AS Balance Sheet prepared at April
01, 2016.

Depreciation

Depreciation on each part of property, plant and equipment are provided to the extent of the depreciable amount
of the assets on the basis of “Written Down Method (WDV)” on the useful lives of the tangible property, plant
and equipment as estimated by the Company’s management and is charged to the statement of profit and loss, as
per the requirement of Schedule - II to the Companies Act, 2013. The estimated useful lives of the property,
plant and equipment has been assessed based on the technical advice, which is considered in the nature of the
property, plant and equipment, the usage of the property, plant and equipment, expected physical wear and tear
of the such property, plant and equipment, the operating conditions, anticipated technological changes,
manufacturer warranties and maintenance support of the property, plant and equipment etc.

When the parts of an item of the property, plant and equipment have different useful lives, they are accounted for
as a separate item (major components) and are depreciated over their useful lives or over the remaining useful
lives of the principal property, plant and equipment, whichever is less.

The Company based on technical assessment made by the technical experts and the Company’s management
estimate, depreciate certain items of property, plant and equipment over the estimated useful lives which are
different from the useful lives as prescribed under Schedule - II of the Companies Act, 2013. The Company’s
management believes that the useful lives as given above are best to represent the period over which Company’s
management expects to use these property, plant and equipment.

Freehold land is not depreciated. Leasehold land and their improvement cost are amortized over the period of the
lease.

The useful lives, residual value of each part of an item of property, plant and equipment and method of
depreciation is reviewed at the end of each reporting period, if any, of these expectations differ from the previous

estimates, such change is accounted for as a change in accounting estimate and adjusted prospectively, if
appropriate.

Derecognition

The carrying amount of an item of property, plants and equipments and other intangible assets are recognized on
disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from
derecognition of the property, plants and equipments is measured as the difference between the net disposal
proceeds and the carrying amount of the assets and is recognized in the statement of profit and loss, as and when
the assets are de-recognized.

b) Intangible Assets
Measurement at Recognition

Intangible assets acquired separately measured on the initial recognition at cost. Intangible assets arising on the
acquisition of business are measured at fair value as at the date of acquisition. Internally generated intangible
assets including research costs are not capitalized and the related expenditure is recognized in the statement of
profit and loss in the period in which the expenditure is incurred. Following the initial recognition, intangible
assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.

Amortization

Intangible assets with the finite lives are amortized on a “Straight Line Basis” over the estimated useful
economics lives of such intangible assets. The amortization expenses on intangible assets with the finite lives are
recognized in the statement of profit and loss.

The amortization period and the amortization method for an intangible assets with the finite useful lives are
reviewed at the end of each financial year, If any, of these expectations differ from the previous estimates, such
changes are accounted for as a change in an accounting estimate and adjusted prospectively, if appropriate.

Derecognition

The carrying amount of an intangible asset are recognized on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the de-recognition of an intangible assets is
measured as the difference between the net disposal proceeds and the carrying amount of the intangible assets
and is recognized in the statement of profit and loss, as and when such assets are de-recognized.

c) Impairment

Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non¬
financial asset may be impaired. Assets that have an indefinite useful life, are not subject to amortization and are
tested for impairment annually and whenever there is an indication that the assets may be impaired.

Assets that are subject to depreciation and amortization and assets representing investments in subsidiary and
associate companies are reviewed for impairment, whenever events or changes in circumstances indicate that
carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or
sustained decline in revenues or earnings and material adverse changes in the economic environments.

The Company assesses at each reporting date, whether there is an indication that assets may be impaired, if any
indication exists based on internal or external factors, or when Annual impairment testing for assets is required,
the Company estimates the asset’s recoverable amount. Where the carrying amount of the assets or its cash
generating unit (CGU) exceeds its recoverable amount, the assets are considered impaired and written down to
its recoverable amount. The recoverable amount is greater of the fair value less cost to sell and value-in-use.

In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
rate that reflects current market rates and the risk specific to the assets. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the CGU to which the assets belong. Fair

value less cost to sell is the best estimate of the amount obtainable from the sale of an assets in an arm’s length
transactions between knowledgeable, willing parties, less cost of disposal. After the impairment, depreciation is
provided on the revised carrying amount of the assets over its remaining useful lives.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the
impairment losses recognized for the assets no longer exists or has decreased. However, the increase in the
carrying amount of assets due to the reversal of an impairment loss is recognized to the extent it does exceed the
carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized
for the assets in the prior years.

Impairment losses, if any, are recognized in the statement of profit and loss and included in depreciation and
amortization expense. Impairment losses are reversed in the statement of profit and loss only to the extent that
the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no
impairment loss had previously been recognized.

d) Revenue Recognition

Revenue from Contracts with Customers

Revenue from contracts with customers is recognized on transfer of control of promised goods or services to a
customer at an amount that reflects the consideration to which the Company is expected to be entitled to in
exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of
variable consideration) allocated to that performance obligation. The transaction price of goods sold and services
rendered is net of variable consideration on account of various discounts and schemes offered by the Company
as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue
(net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not
be subject to significant reversal when uncertainty relating to its recognition is resolved.

Sale of Products

Revenue from sales of goods is recognized, when control on the goods have been transferred to the customers.
The performance obligation in the case of sale of goods is satisfied at a point in time i.e. when the material is
shipped to the customers or delivery to the customers as may be specified in the contracts with them.

Sales (Gross) excludes Goods and Service Tax (GST) and is net of discounts and incentives to the customers.

Sale of Services

Revenue from sales of service is recognized over time by measuring the progress towards satisfaction of
performance obligation for the service rendered. The revenue is recognized based on the
agreements/arrangements with the customers as the service is performed and based on the satisfaction of
performance obligation. Advances from customers is recognized under “Other Current Liabilities” and released
to revenue on satisfaction of performance obligation.

Interest

Revenue from Interest income is recognized using the effective interest method. Effective interest rate (EIR) is
the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the
financial instruments or a shorter period, where appropriate, to the gross carrying amount of the financial assets
or to the amortized cost of financial liabilities.

e) Inventories

Raw material, work-in-progress, finished goods, packing material, stores and spares, components, consumables
and stock-in-trade are carried at lower of cost and net realizable value. However, materials and other items held
for use in the production of inventories are not written - down below cost, if the finished goods in which they
will be incorporated are expected to be sold at or above costs. The comparison of costs and net realizable value is
made on an item-by-item basis. In determining the cost of raw materials, work-in-progress, finished goods,
packing materials, stores and spares, components and stock-in-trade, “First-in-First-ouf ’ method is used. Cost of
inventories comprises all costs of purchase, non-refundable duties and taxes, cost of conversion including an
appropriate share of fixed and variable production overheads and all other costs incurred in bringing the
inventory to its present location and conditions.

“Net Realizable Value” is the estimated selling price of inventories in the ordinary course of business, less
estimated costs of completion and estimated cost necessary to make the sales of the products.

The Company considers factors like estimated shelf life, product discontinuances and aging of inventory in
determining the provision for slow moving, obsolete and other non-saleable inventory and adjust the inventory
provision to reflect the recoverable value of the inventory.

f) Financial Instruments

A financial instrument is in any contract that gives rise to the financial assets of one entity and financial
Financial Assets

Initial Recognition and Measurements

The Company recognizes financial assets in its balance sheet, as and when it becomes party to the contractual
provisions of the instruments. All the financial assets are recognized initially at fair value, plus in the case of
financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to
the acquisition of the financial assets. However, trade receivables that do not contain a significant financing
component are measured at transaction price.

Where the fair value of a financial assets at initial recognition is different from its transaction price, the
difference between the fair value and the transaction price is recognized as a gain or loss in the statement of
profit and loss at initial recognition, if the fair value is determined through a quoted market price in an active
market for identical assets (i.e. level 1 input) or through a valuation technique that uses data from observable
markets (i.e. level 2 input).

In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred appropriately and recognized as a gain or loss in the
statement of profit and loss only to the extent that such gain or loss arises due to a change in factor that market
participants taken into account, when pricing the financial assets.

Subsequent Measurements

For subsequent measurements, the Company classifies financial assets in accordance with the below criteria:

i) The Company’s business model for managing the financial assets and

ii) The contractual cash flows characteristics of the financial assets.

Based on the above criteria, the Company classifies its financial assets into the following categories:

i) Financial assets measured at amortized costs

ii) Financial assets measured at fair value through other comprehensive income (FVTOCI)

iii) Financial assets measured at fair value through profit or loss (FVTPL)

Financial Assets measured at Amortized Costs

A financial asset is measured at the amortized costs if both the following conditions are met:

a) The Company’s business model objective for managing the financial asset is to hold financial assets in order
to collect contractual cash flows, and

b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

This category applies to cash and bank balances, trade receivables, loans and other financial assets of the
Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.

Under the effective interest method, the future cash receipts are discounted to the initial recognition value using
the effective interest rate. The cumulative amortization using the effective interest method of the difference
between the initial recognition amounts and the maturity amount is added to the initial recognition value (net of
principal repayments, if any) of the financial assets over the relevant period of the financial assets to arrive at the
amortized costs at each reporting date. The corresponding effect of the amortization, under effective interest
method is recognized as interest income over the relevant period of the financial assets. The same is included
under “Other Income” in the statement of profit and loss.

The amortized costs of financial assets are also adjusted for loss allowance, if any.

Financial Assets measured at FVTOCI

A financial asset is measured at FVTOCI if both of the following conditions are met:

a) The Company’s business model objective for managing the financial assets is achieved both by collecting
contractual cash flows and selling the financial assets, and

b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

This category applies to certain investments in debt instruments. Such financial assets are subsequently measured
at fair value at each reporting date. Fair value changes are recognized in the Other Comprehensive Income
(OCI). However, the Company recognizes interest income and impairment losses and its reversals in the
statement of profit and loss.

On de-recognition of such financial assets, cumulative gain or loss previously recognized in OCI is reclassified
from equity to statement of profit and loss.

Further, the Company, through an irrevocable election at initial recognition, has measured certain investments in
the equity instruments at FVTOCI. The Company has made such election on an instrument-by-instrument basis.
These equity instruments are neither held for trading nor are contingent consideration recognized under a
business combination. Pursuant to such irrevocable election, subsequent changes in the fair value of such equity
instruments are recognized in other comprehensive income. However, the Company recognizes dividend income
from such instruments in the statement of profit and loss, when the right to receive such payment is established,
it is probable that the economic benefits will flow to the Company and the amount can be measured reliably.

On de-recognition of such financial assets, cumulative gain or loss previously recognized in OCI is not
reclassified from the equity to statement of profit and loss. However, the Company may transfer such cumulative
gain or loss into retained earnings within equity.

Financial Assets measured at FVTPL

A financial asset are measured at FVTPL unless it is measured at amortized costs or at FVTOCI as explained
above. This is a residual category applied to all other investments of the Company excluding investments in
subsidiary and associate companies. Such financial assets are subsequently measured at fair value at each
reporting date. Fair value changes are recognized in the statement of profit and loss.

Derecognition

A financial assets (or, where applicable, a part of a financial assets or part of a group of similar financial assets)
is derecognized (i.e. removed from the Company’s balance sheet) when any of the following occurs:

i) The contractual rights to cash flows from the financial assets expires;

ii) The Company transfers its contractual rights to receive cash flows of the financial assets and has substantially
transferred all the risks and rewards of ownership of the financial assets;

iii) The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay
the cash flows without material delay to one or more recipients under a “pass-through” arrangement (thereby
substantially transferring all the risks and rewards of ownership of the financial assets);

iv) The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain
control over the financial assets.

In cases, where the Company has neither transferred nor retained substantially all of the risks and rewards of the
financial assets, but retains control of the financial assets, the Company continues to recognize such financial
assets to the extent of its continuing involvement in the financial assets. In that case, the Company also
recognizes associated liabilities. The financial assets and the associated liabilities are measured on a basis that
reflects the rights and obligations that the Company has retained.

On de-recognition of a financial assets, (except as mentioned in above for financial assets measured at FVTOCI),
the difference between the carrying amount and the consideration received is recognized in the statement of
profit and loss.

Impairment of Financial Assets

The Company applies expected credit losses (ECL) model for measurements and recognition of loss allowance
on the following:

i) Trade receivables

ii) Financial assets measured at amortized costs (other than trade receivables)

iii) Financials assets measured at fair value through other comprehensive income (FVTOCI)

In case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime
ECL is measured and recognized as loss allowance.

In case of other assets (listed as ii and iii above), the Company determines, if there has been a significant
increase in credit risk of the financial assets since the initial recognition. If the credit risk of such assets has not
increased significantly, an amount equal to twelve months ECL is measured and recognized as loss allowance.
However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized
as loss allowance.

Subsequently, if the credit quality of the financial assets improves such that there is no longer a significant
increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance
based on twelve months ECL.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the entity expected to receive (i.e., all cash shortfalls), discounted at the
original effective interest rate.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a
financial assets. Twelve months ECL is a portion of the lifetime ECL which results from default events that are
possible within twelve months from the reporting date.

ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a
range of outcomes, taking into account the time value of money and other reasonable information available as a
result of past events, current conditions and forecasts of future economic conditions.

As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade
receivables. The provision matrix is prepared based on historically observed default rates over the expected life
of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically
observed default rates and changes in the forward-looking estimates are updated.

ECL impairment loss allowance (or reversal) recognized during the reporting period are recognized as income /
expense in the statement of profit and loss under the head “Other Expenses”.

Financial Liabilities

Financial Liabilities

Initial Recognition and Measurements

The Company recognizes financial liabilities in its balance sheet when it becomes party to the contractual
provisions of the instruments. All financial liabilities are recognized initially at fair value, in the case of financial
liabilities not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the
acquisition of the financial liabilities.

Where the fair value of a financial liabilities at initial recognition is different from its transaction price, the
difference between the fair value and the transaction price is recognized as a gain or loss in the statement of
profit and loss at initial recognition, if the fair value is determined through a quoted market price in an active
market for an identical assets (i.e. level 1 input) or through a valuation technique that uses data from observable
markets (i.e. level 2 input).

In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference
between the fair value and transaction price is deferred appropriately and recognized as a gain or loss in the
statement of profit and loss, only to the extent that such gain or loss arises, due to a change in factor that market
participants take into account when pricing the financial liabilities.

Subsequent Measurements

All financial liabilities of the Company are subsequently measured at amortized costs using the effective interest
method.

Under the effective interest method, the future cash payments are exactly discounted to the initial recognition
value using the effective interest rate. The cumulative amortization using the effective interest method of the
difference between the initial recognition amount and the maturity amount is added to the initial recognition
value (net of principal repayments, if any) of the financial liabilities over the relevant period of the financial
liabilities to arrive at the amortized costs at each reporting date. The corresponding effects of the amortization,
under effective interest method is recognized as interest expense over the relevant period of the financial
liabilities. The same is included under finance costs in the statement of profit and loss.

Derecognition

A financial liabilities are de-recognized when the obligation under the liabilities are discharged or cancelled or
expires. When an existing financial liabilities are replaced by another from the same lender on substantially
different terms, or the terms of an existing liabilities are substantially modified, such an exchange or
modification are treated as the de-recognition of the original liabilities and the recognition of a new liabilities.
The difference between the carrying amount of the financial liabilities de-recognized and the consideration paid
is recognized in the statement of profit and loss.

Offsetting of Financial Assets and Financial Liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a
currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis
or to realize the assets and settle the liabilities simultaneously.

g) Fair Value

The Company measures financial instruments at fair value in accordance with the accounting policies mentioned
above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on the
presumption that the transaction to sell the assets or transfer the liabilities takes place either:

* In the principal market for the assets or liabilities, or

* In the absence of a principal market, in the most advantageous market for the assets or liabilities.

All the assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within fair value hierarchy that categorizes into three levels, described are as follows, the inputs to
valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices
in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs
(Level 3 inputs).

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities,
either directly or indirectly;

Level 3 - Inputs that are unobservable for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the
Company determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization at the end of each reporting period and discloses the same

h) Foreign Currency Transactions
a) Initial Recognition

Transactions in the foreign currencies entered into by the Company are accounted in the functional currency (i.e.
Indian Rupee ''), by applying the exchange rates prevailing on the date of the transaction i.e. spot exchange rate.

Any exchange difference arising on foreign exchange transactions settled during the reporting period are
recognized in the statement of profit and loss except to the extent that they are regarded as an adjustment to the
finance costs on foreign currency borrowings that are directly attributable to the acquisition or constructions of
the qualifying assets, are capitalized to the qualifying assets.

b) Measurement of Foreign Currency Items at Reporting Date

Foreign currency monetary items of the Company are restated as at the end of the reporting date by using the
closing exchange rate as prescribed by the Reserve Bank of India. Non-monetary items are recorded at the
exchange rate prevailing on the date of the transactions i.e. measured at historical costs. Non-monetary items that
are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair
value is measured i.e. using the exchange rate at the date of transactions. Exchange differences arising out of
foreign exchange translations and settlements during the period are recognized in the statement of profit and loss.

i) Taxes on Income

Tax expense comprises current tax and deferred income tax. Tax expenses is the aggregate amount included in
the determination of profit or loss for the reporting period current tax and deferred income tax. Tax expenses are
recognized in the statement of profit and loss, except to the extent that it relates to the items recognized in the
other comprehensive income or in the equity. In that case, tax is also recognized in other comprehensive income
or equity.

Current income tax is the amount of income tax payable in respect of taxable profit for the reporting period.
Taxable profit differs from “Profit Before Tax” as reported under the statement of profit and loss because of item
of expenses or income that are taxable or deductible in other years and items that are never taxable or deductible
under Income Tax Act, 1961.

Current tax assets and liabilities are measured by using the tax rates that have enacted by the end of the reporting
period for the amounts expected to be recovered from or paid to the income tax authorities. Current tax also
includes any adjustment amount to tax payable / receivable in respect of previous reporting period.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax
Act, 1961 and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted
or substantively enacted at the reporting date.

Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of
temporary difference that arises from initial recognition of assets or liabilities in a transaction that affect neither
the taxable profits nor the accounting profits, deferred tax liabilities are not recognized. Also, for temporary
differences, if any, that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.

Deferred tax assets are generally recognized for all deductible temporary differences, and any unused tax losses
and unused tax credits, to the extent, it is probable that taxable profits will be available against which those
deductible temporary difference can be utilized. In case of temporary differences that arise from initial
recognition of assets or liabilities in a transaction that affect neither the taxable profits nor the accounting profits,
deferred tax assets are not recognized.

The carrying amount of deferred tax assets / liabilities are reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the
benefits of part or all of such deferred tax assets to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted at
the balance sheet date and are expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

Uncertain Tax Positions

The Company’s management periodically evaluates the positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and consider whether it is probable that
a taxation authority will accept an uncertain tax treatments. The Company reflects the effect of uncertainty for
each uncertain tax treatment by using one of two methods, the expected value method (the sum of the possibility
- weighted amounts in range of possible outcomes) or the most likely amount (single most likely amount method
in a range of possible outcomes), depending on which is expected to better predict the resolution of the
uncertainty. The Company applies consistent judgements and estimates if an uncertain tax treatment affects both
the current and deferred income tax.

Presentation

Current tax and deferred tax are recognized as income or an expense in the statement of profit and loss, except
when they relate to items that are recognized in other comprehensive income, in which case, the current tax and
deferred tax income / expense are recognized in other comprehensive income.

The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set
off the recognized amounts and where it intends either to settle on a net basis, or to realize the assets and settle
the liabilities simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset, if the
Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities
and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on
the Company.

j) Lease

A lease is classified at the inception date as finance lease or an operating lease. A lease that transfers
substantially all the risk and rewards incidental to the ownership to the Company is classified as a finance lease.
All other lease is classified as operating lease.

The Company as a Lessee

a) Operating Lease: Rental payable under the operating lease are charged to the statement of profit and loss on
a straight-line basis over the term of the relevant lease except where another systematic basis is more
representative of time pattern in which economic benefits from the leased assets are consumed.

b) Finance Lease: Finance lease are capitalized at the commencement of the lease, at the lower of the fair value
of the property or the present value of the minimum lease payments. The corresponding liabilities to the lessor is
included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance
expenses and the reduction of the lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liabilities. Finance expenses are charged directly against the income over the period of the lease
unless they are directly attributable to the qualifying assets, in which case they are capitalized. Contingent rental
is recognized as an expense in the period in which they are incurred.

A leased assets are depreciated over the useful lives of the assets, however, if there is no reasonable certainty that
the Company will obtain ownership by the end of the lease term, the assets are depreciated over the shorter of the
estimated useful lives of the assets and the lease terms.

The Company as a Lessor:

Lease payments under operating leases are recognized as an income on a straight-line basis in the statement of
profit and loss over the lease term except where the lease payments are structured to increase in line with
expected general inflation. The respective leased assets are included in the balance sheet based on their nature.

n) Borrowing Costs

Borrowing cost include the interest, commitments charges on bank borrowings, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to the finance cost.

Borrowing costs, if any, that are directly attributable to the acquisition or constructions or production of
qualifying property, plants and equipments are capitalized as a part of cost of that property, plants and
equipments until such time that the assets are substantially ready for their intended use. Qualifying assets are
assets which take the substantial period of time to get ready for the intended use or sale.

When the Company borrows the funds specially for the purpose of obtaining the qualifying assets, the borrowing
costs incurred are capitalized with the qualifying assets. When the Company borrows fund generally and use
them for obtaining a qualifying assets, the capitalization of borrowing costs are computed on weighted average
cost of general costs that are outstanding during the reporting period and used for acquisition of the qualifying
assets. Capitalization of the borrowing costs ceases when substantially all the activities necessary to prepare the
qualifying assets for intended use are complete.

Other borrowing costs are recognized as expenses in the period in which they are incurred. Any interest income
earned on temporary investment of specific borrowings pending their expenditure on qualifying assets are
deducted from the borrowing costs eligible for capitalization.

l) Employee Benefits

Short-Term Employee Benefits

All the employee benefits payable wholly within twelve months of rendering the services are classified as short¬
term employee benefits and they are recognized in the period in which the employee renders the related services.
The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in the
exchange for services are rendered as a liabilities (accrued expense) after deducting any amount already paid.

Post - Employment Benefits

a) Defined Contribution Plans

Defined contribution plans are employee state insurance scheme and Government administrated pension fund
scheme for all the applicable employees and superannuation scheme for all the eligible employees, if any, who
met eligible criteria. The Company’s contribution to defined contribution plans is recognized in the statement of
profit and loss in the reporting period to which they relate.

i)Recognition and Measurement of Defined Contribution Plans

The Company recognizes contribution payable to a defined contribution plan as an expense in the statement of
profit and loss when the employees render services to the Company during the reporting period. If the
contributions payable for services received from employees before the reporting date exceeds the contributions
already paid, the deficit payable is recognized as a liability after deducting the contribution already paid. If the
contribution already paid exceeds the contribution due for services received before the reporting date, the excess
is recognized as an assets to the extent that the prepayment will lead to, for example, a reduction in future
payments or a cash refund.

b) Defined Benefits Plans
i) Gratuity

The Company operates a defined benefits plan for its employees. The Company pays the gratuity to employee
whoever has completed its five year of service with the Company at the time of retirement or resignation or
superannuation. The gratuity is paid @ 15 Days salary for every completed year of service as per the Payment of
Gratuity Act, 1972.

The liabilities in respect of gratuity is calculated using “Project Unit Credit Method” and spread over the period
during which the benefits is expected to be derive from employee services. The remeasurement of defined
benefits plan in respect of post-employments are charged to the other comprehensive income (OCI).

Provident fund is defined contribution plan covering certain eligible employees. The Company and the eligible
employees make a monthly contribution to the provident fund maintained by the regional provident fund
commissioners equal to the specified percentage of the basic salary of the eligible employees as per the scheme.
The contributions to the provident fund are charged to the statement of profit and loss for the period, when the
contributions are due.

Recognition and Measurement of Defined Contribution Plans

The cost of providing defined benefits is determined using the “Projected Unit Cash Credit method” with
actuarial valuations being carried out at each balance sheet date. The defined benefit obligations recognized in
the balance sheet represent the present value of the defined benefit obligations as reduced by the fair value of
plan assets, if applicable. Any defined benefit assets (negative benefit defined obligations resulting from these
calculations) are recognized representing the present value of available refunds and reductions in future
contributions to the plan.

All expenses represented by current service cost, past service cost, if any, and net interest on defined benefit
liabilities / (assets) are recognized in the statement of profit and loss. Re-measurements of the net defined
benefits liabilities / (assets) comprising actuarial gains and losses and the return on the plan assets (excluding
amounts included in net interest on the net defined benefit liabilities / assets), are recognized in other
comprehensive income. Such re-measurements are not reclassified to the statement of profit and loss in the
subsequent periods.

Past service cost is recognized immediately to the extent that the benefits are already vested, else is amortized on
a straight-line basis over the average period until the amended benefits become vested. Actuarial gain or losses
in respect of the defined benefits plan are recognized in the statement of profit and loss in the year in which they
arise.

The Company presents the above liabilities as current and non-current in the balance sheet as per the actuarial
valuation by the independent actuary.

The Company generally operates with the policy to hire the outsourcing man power supply agencies, thus the
total employee strength of the Company is below the threshold limit as prescribed under the Payment of Gratuity
Act, 1972 and Employee Provident Fund Act and Miscellaneous Provision Act, 1952. Hence, the said Act is not
applicable in the case of the Company.

m) Earnings per Share

The Company reports the basic and diluted Earnings per Share (EPS) in accordance with Ind AS - 33, “Earnings
per Share”. Basic EPS is computed by dividing the net profit or loss attributable to the equity shareholders of the
Company for the period by the weighted average number of equity shares outstanding during the period.

Diluted EPS is computed by dividing the net profit or loss attributable to the equity shareholders for the period
by the weighted average number of equity shares outstanding during the period as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.

The weighted average number of equity shares outstanding during the period is adjusted for events such a bonus
Issue, bonus elements in right issue, share splits, and reverse share split (consolidation of shares) that have
changed the number of equity shares outstanding, without a corresponding change in resources.

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Mar 31, 2013

1. System of Accounting: -

The financial statements have been prepared to comply in all material respects with the generally accepted accounting principles, Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 and the relevant provisions thereof.

The financial statements have been prepared under the historical cost convention on accrual basis of accounting except that insurance and other claims/refunds are being accounted for/adjusted in the books as and when settled. The accounting policies have been consistently applied by the Company and are in line with those used last year. The Company has not carried out any fresh business, on account any accumulated losses, the net worth of the company had eroded, the account of the company has been prepared on the going concern basis, although there exists an uncertainty about the future activities.

The Company follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis.

2. Revenue Recognition: -

Expenses and Income considered payable and receivable respectively are accounted for on accrual.

3. Fixed Assets: -

Fixed assets are stated at historical cost, except part of leasehold land, building, shed and Plant & Machinery revalued and stated at less accumulated depreciation and impairment losses if any. Cost comprises of the purchase price (net of tax/duty credit availed) and any cost direct / incidental and borrowing cost attributable bringing the asset to its working condition for its intended use.

Flat at Dadar included under the head of building includes cost of share in co- operative society of the value of Rs. 100/-

4. Depreciation on Fixed Assets: -

Depreciation is provided on fixed assets on straight line basis in accordance with the rates prescribed in Schedule XIV of the Companies Act 1956.

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal and external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount.

The recoverable amount is the greater of the assets'' net lllilll selling price and the value in use. In assessing value in use the estimated future cash flows are discounted to their present value at the weighted average cost of capital

i) Depreciation on assets installed upto 30 June, 1987 is provided at the rate of depreciation prevalent at the time of installation of assets as per clarification by the ministry of industry, department of company affairs, vide its circular no. 1/86 dt. 21st may, 1986.

ii) Deprecation on installation of fixed assets after 30 June, 1987 is provided as per rates specified in the schedule XIV of The Companies Act, 1956.

After 31st March, 1993:

Depreciation on all Assets installed after 31 March 1993 is provided at the new rates as amended by the Notification no. GSR756(E) DT. 16/12/93 read with circular no. 14 Dt. 20/12/93 issued by the Department of Company Affairs.

Depreciation on assets except Building and Shed and Plant and Machinery is provided on "Written down value method" as per provision of section 205(2) Schedule XIV of The Companies Act, 1956.

5. Investments:

Investments are of long term nature and stated at cost.

6. Inventories: -

Inventories valued at cost or net realizable value whichever is lower.

7. Employee Benefits

Contributions to defined contribution schemes such as provident fund are charged to profit and loss account as incurred. The liability for Gratuity has been provided. Actuary provision for Leave encashment payable to the employees is not made as the same is accounted on cash basis.

8. Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which reliable estimates can be made.

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Mar 31, 2011

(1) GENERAL:

(a) THE ACCOUNTS OF THE COMPANY HAVE BEEN PREPARED ON THE CONCEPT OF GOING CONCERN AND ON ACCRUAL BASIS EXCEPT THAT INSURANCE AND OTHER CLAIMS/REFUNDS ARE BEING ACCOUNTED FOR/ADJUSTTED IN THE BOOKS AS AND WHEN SETTLED

(b) ACCOUNTING POLICIES NOT SPECIFICALLY REFERRED TO OTHERWISE, ARE ARE CONSISTENT AND IN CONSONANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(2)THE METHOD OR ACCOUNTING

THE COMPANY MANINTANIS ITS ACCOUNTS ACCRUAL BASIS EXCEPT OTHER THAN THOSE STATED SPECIFICALLY.

(3) FIXED ASSETS:

(a) FIXED ASSETS ARE VALUED AT COST LESS DEPRECIATION EXCEPT PART OF LEASEHOLD LAND BUILDING & SHED AND PLANT & MACHINERY ARE VALUED ATREVALUTION PRICE LESS DEPRECIATION. COST INCLUDES PURCHASE PRICE, FREIGHT COST, INSTALLATION COST AD FINANCE COST

(b) FLAT AT DADAR INCLUDED UNDER THE HEAD OF BUILDING INCLUDES COST OF SHARE IN CO-OPERATIVE SOCIETY OF THE VALUE OF RS. 100/-.

(4) DEPRECIATION:

(a) THE COMPANY PROVIDES DEPRECIATION ON BUILDING AND MACHINERY& SHED AND PLANT & MACHINERY ON STRAIGHT LINE METHOD IN ACCORDANCE WITH THE PROVISIONS OS SECTION 205 (2) OF THE COMPANIES ACT, 1956.

(b) THE RATES OF THE DEPRECIATION ON STRAIGHT LINE METHOD IS FOLLOWED AS UNDER:

(I)TILL 31st MARCH. 1993:

i) DEPRECIATION ON ASSETS INSTALLED UPTO 30™ JUNE, 1987 IS PROVIDED AT THE RATE OF DEPRECIATION PREVALENT AT THE TIME OF INSTALLATION OF ASSETS AS PER CLARIFICATION BY THE MINISTRY OF INDUSTRY, DEPARTMENT OF COMPANY AFFAIRS, VIDE ITS CIRCULAR NO. 1/86 DT.2l"MAY, 1986.

ii) DEPRECIATION ON INSTALLATION OF FIXED ASSETS AFTER 30™ JUNE, 1987 IS PROVIDED AS PER RATES SPECIFIED IN THE SCHEDULE XIV OF THE COMPANIES ACT, 1956.

(ii) AFTER 31ST MARCH.1993:

DEPRECIATION ON ALL ASSETS INSTALLED AFTER 31ST MARCH 1993IS PROVIDED AT THE NEWORK AT IS AS AMENDED BY & NOTIFICATION NO.GSR 756 (E) DT. 16/12/93 RE&D WITH CIRCULAR 14 DT.20/12/93 ISSUED BY THE DEPARTMENT OF COMPANY.

Depreciation ON ASSETS EXCEPT BUILDING AND SHED AND PLANT AND MACHINERY IS PROVIDED DOWN VALUE METHOD" AS PER PROVISION OF SECTION 205(2) (a) SCHEDULE XIV OF THE COMPANIES ACT, 1956

(5) RETIREMENT BENEFITS:

a) PROVIDENT FUND:

COMPANY MAKES THE PROVISION AND PAYMENT OF PROVIDENT FUND AND SAME IS CHARGED TO PROFIT AND LOSS ACCOUNT.

(b) UNAVAILED LEAVE:

THE LIABILITY OF UNAVAILED LEAVE HAS BEEN ESTIMATED AT THE YEAR END AND CHARGED TO PROFIT & LOSS ACCOUNT.

(c) GRATUITY:

THE LIABILITY OF GRATUITY HAS BEEN PROVIDED

6)INVETMENTS:

INVESTMENTS ARE OF LONGTERMNATURE AND STATED ATCOST.

(7) INVENTORY VALUATION:

INVENTORY VALUED AT COST OR NET REALISABLE VALUE WHICH IS LOWER.

(8) SALES TAX:

(i) LIABILITIES OF SALES TAX, IF ANY, ON COMPLETION OF ASSESSMENTSA AT AUDIT ARE ACCOUNTED FOR ON ACCURAL BASIS.